Britain’s pension system is floundering

Unless reforms are made soon, the pension system will fail the next generation

Britain’s current pension system needs a significant overhaul with a long-term increase in funding and a rise in the retirement age, a recent report found.

The Pensions Commission released a 460-report stating that the present state pension system, combined with private schemes, were untenable for the future.

The report stated the government needs to increase pension spending over the next 45 years to sustain the system for future generations. The commission warned the problems will worsen unless reforms start soon.

The report recommended the establishment of a National Pension Savings scheme into which individuals are automatically enrolled but have the right to opt out. The pension schemes should also be less complex and more understandable while maintaining improvements in the standard of living of the poorest pensioners.

To achieve these objectives, the report recommended two elements of reform — the creation of a low cost, nationally funded pension savings scheme into which individuals will be automatically enrolled, but with the right to opt out, with a modest level of compulsory employer contribution.

To achieve these goals, there will need to be an increase in taxes devoted to pension expenditure and an increase in state retirement ages. According to the report, if the rise in the retirement age after 2020 was in proportion to rising life expectancy, the age would rise to 66 in the year 2030 and 67 in the year 2050.

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